Funding dips by 86% from the same week last year, with PhonePe’s $100 million investment by General Atlantic dominating the scene.
Indian startups witnessed a decline in funding this week, raising only $206 million across 20 rounds, as reported by market intelligence firm Tracxn. The figures show a significant 86% drop from the same one-week period last year when startups managed to secure $1.5 billion in 66 rounds. Furthermore, this week’s funding activity saw an 84% decrease compared to the previous week, which saw $1.26 billion in investments across 18 rounds.
Funding Breakdown
A considerable portion of the total funding came from PhonePe, which raised $100 million from existing investor General Atlantic. This investment brings General Atlantic’s total contribution to PhonePe’s ongoing $1 billion funding round to $450 million, following a $200 million investment by its parent company, Walmart, last month.
Late-stage funding, primarily driven by PhonePe’s $100 million raise, constituted more than half of the total funding activity. Seed-stage funding stood at $18.2 million, representing 9% of the total funds raised, while early-stage investments accounted for 36% of the share, with $73.7 million.
Startups Funded This Week
Below is a list of startups that secured funding this week:
- PhonePe received an additional $100 million from General Atlantic as part of the company’s $1-billion primary funding plan. General Atlantic and affiliate funds may invest another $100-200 million, according to three sources familiar with the matter.
- Mayhem Studios, a mobile game development studio launched by esports and online gaming unicorn Mobile Premier League (MPL) last year, raised $20 million in its Series A round led by Sequoia Capital, with participation from Steadview Capital, Truecaller, and others.
- JSW One Platforms secured Rs 205 crore in funding from Japan’s Mitsui & Co, valuing the marketplace at Rs 2,750 crore. JSW One Platforms will use the funds to strengthen its market presence and improve its technology.
- Celcius Logistics raised Rs 100 crore in a funding round led by IvyCap Ventures. The cold chain solutions provider had previously raised Rs 35 crore from existing investors Mumbai Angels, Supply Chain Labs, Endurance Capital, VCats, Huddle, Eaglewings Ventures (EVAN), and others.
- SimpliContract closed a pre-series A funding round of $3.5 million led by Emergent Ventures, with participation from Kalaari Capital, Picus Capital, Foster Ventures, Leslie Ventures, and Sentinel Ventures. The Contract Lifecycle Management (CLM) venture will use the funds primarily for growth and expansion in the US and European markets, focusing on investments in sales and marketing.
- Luxury skincare and personal care brand RAS raised $1.5 million from New York-based sustainability-focused venture capital firm Green Frontier Capital and other existing investors. The luxury direct-to-consumer (D2C) skincare and beauty brand claims to be growing at a rate of 300% year-on-year since its inception in 2017.
Analysis of the Funding Dip
The considerable dip in funding this week raises concerns about the Indian startup ecosystem. However, it is essential to remember that funding activity can fluctuate from week to week, and a single week’s data may not necessarily indicate a long-term trend. External factors, such as changes in the global economy, investor sentiment, or geopolitical issues, can also influence funding activity.
Moreover, the late-stage funding in PhonePe dominated the funding activity this week, overshadowing the smaller deals in seed and early-stage investments. As a result, the current data may not accurately reflect the overall health of the Indian startup ecosystem. It is crucial to observe the funding patterns over a more extended period before drawing any conclusions about the startup landscape.
The Future Outlook
Despite the drop in funding this week, the Indian startup ecosystem remains vibrant and promising. With a booming population and a rapidly expanding middle class, India continues to be an attractive market for both local and international investors. The country has produced several unicorns in recent years, highlighting the potential for significant returns on investment.
The Indian government has also taken measures to support the growth of startups, implementing initiatives like the “Startup India” campaign and providing tax benefits to eligible startups. Furthermore, the Reserve Bank of India (RBI) has eased regulations for venture capital funds and foreign investors, encouraging more investment in the Indian startup ecosystem.
In conclusion, while this week’s funding decline may be a cause for concern, it is essential to view the data in context and consider the broader trends within the Indian startup ecosystem. With a strong market, government support, and favourable regulations, the future of Indian startups remains promising.